HB3 Alabama 2022 1st Special Session

Summary

Primary Sponsor

Jim CarnsRepresentative

Republican

Session

First Special Session 2022

Title

Taxation, income tax, exclusion of enhanced federal child tax credits from American Rescue Plan Act from calculation of federal income tax deduction for tax year 2021, to provide an extension of the due date for certain taxpayers, Secs. 40-16-3.1, 40-18-39.2 added.

Summary

HB3 changes Alabama's 2021 tax rules to ignore ARPA’s higher federal credits for state deduction calculations and adds a one-month filing extension for certain corporate and financial-institution taxes.

What This Bill Does

It assigns Alabama’s 2021 federal income tax deduction to be calculated as if the federal credits from ARPA hadn’t increased them, using the 2020 IRC rules instead. This allows individuals to receive the enhanced federal credits without a larger state tax deduction reducing their benefit. It also creates a one-month extension after the federal due date for filing Alabama financial institution excise and corporate income tax returns for certain tax years, and lets the Department of Revenue grant similar extensions in some cases, without delaying tax payments. The department is empowered to adopt rules to carry out these changes, and the bill takes effect immediately after approval.

Who It Affects

• Individual Alabama taxpayers who claim federal child tax credits, earned income credits, or child/dependent care credits, by altering how their 2021 federal tax deduction is calculated.
• Corporate income taxpayers and financial-institution excise taxpayers in Alabama, who would receive a one-month extension to file after the federal due date for specific tax years.
• The Alabama Department of Revenue, which would implement the changes and may issue rules to administer the extensions.

Key Provisions

• Section 1: For tax year 2021, determine the federal income tax deduction without ARPA-based reductions and instead use the 2020 Internal Revenue Code for calculating reductions from the specified credits.
• Section 2: Add 40-16-3.1 and 40-18-39.2 to allow a one-month extension after the federal due date to file Alabama financial institution excise and corporate income tax returns for eligible tax years (with possible earlier one-month extension for 2020-2021 upon request and approval).
• Section 3: The Department of Revenue may adopt rules to implement this act.
• Section 4: The act becomes effective immediately after passage and approval.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation